Cabinet members did not inform Bush about Enron contacts

WASHINGTON -- Two Bush cabinet members said Sunday they never considered intervening in Enron's spiral toward bankruptcy, nor informed President Bush of requests for help from the fallen energy giant.

"Companies come and go. It's ... part of the genius of capitalism," said Treasury Secretary Paul O'Neill, when asked if he was surprised at the sudden collapse of Enron. The company's failure has left the one-time energy trading behemoth's stock virtually worthless and thousands of workers' pension funds in disarray.

Last fall, a month before Enron declared bankruptcy, O'Neill received two telephone calls from Enron's chief executive, Kenneth Lay. Lay also called Commerce Secretary Don Evans at the time, reaching out for help to harness the energy company's financial slide.

O'Neill's view of Enron's collapse was characterized as "cold-blooded" and reflective of "the 18th century, but not the 21st century" by Sen. Joseph Lieberman, D-Conn., whose Committee on Governmental Affairs is leading Senate investigations into the Enron debacle.

Separately, Lieberman said that an internal Arthur Andersen LLP memo on Oct. 12 directing that all but basic Enron working papers be destroyed "raises very serious questions about whether obstruction of justice occurred."

Andersen this past week revealed that Enron documents had been destroyed. But Lieberman said most troubling was that the memo, disclosed in a report in Time magazine, "was specifically about Enron" and not a general directive to clean out files. Congressional investigators want to find out why Andersen did not raise flags about Enron's business practices.

Lieberman and Sen. John McCain, R-Ariz., said on CBS' "Face the Nation" the administration may have been right in not intervening to try to save Enron. But they said the government's response -- as well as earlier federal monitoring of its business practices -- may have been hampered by the energy company's freewheeling flow of campaign contributions.

"We're all tainted by the millions and millions of dollars that were contributed by Enron executives, which ... creates the appearance of impropriety," said McCain, a longtime voice for campaign finance reform. McCain acknowledged getting $9,500 in Enron contributions in two Senate campaigns.

Lieberman, who said he received $1,000 from Enron in his 1994 Senate campaign, said one focus of his committee's investigation will be "whether any of the influence" from Enron money affected the administration's handling of the Enron collapse, or oversight by federal agencies.

"I don't feel at all compromised," added Lieberman, referring to his committee's investigation.

Since 1990, Enron and its employees contributed $5.77 million to political campaigns, about three-fourths of it to GOP candidates. About half of the money was spent in the 2000 election, with President Bush a major beneficiary.

O'Neill and Evans said Sunday that while they received calls from Lay in late October and early November, they dismissed any suggestion of intervening to help the company.

Evans said that Lay was looking "for all the possible ways that he could stabilize his company" and asked that Evans consider contacting credit rating agencies. "I considered it and said, 'Thank you for the call,'" Evans said on NBC's "Meet the Press."

O'Neill said that Lay, in a call of three or four minutes, "asked me for nothing." But O'Neill acknowledged that during one conversation Lay said Enron's ability to sustain its credit rating "was a critical aspect" of keeping a merger with rival Dynegy on track. The merger later fell apart.

The Treasury Department has acknowledged that, around the same time in late October and early November, another Enron executive repeatedly contacted Peter Fisher, a Treasury undersecretary, trying to get the government to encourage banks to extend credit to the struggling company.

Sen. Carl Levin, D-Mich., whose Senate Governmental Affairs subcommittee has issued 51 subpoenas in connection with its Enron investigation, said Sunday on ABC, "I have no doubt that they were asking for the government to take action."

But an Enron spokesman, Mark Palmer, said the calls "were informational" and "not about trying to improve our credit rating."

Neither O'Neill nor Evans said they informed President Bush of the telephone calls. But Evans said he frequently discussed Enron's situation during general meetings with the president in November and December.

The tone of those conversations was "how sad it was to see what was happening to that once great company," Evans said on NBC.

Enron filed for bankruptcy on Dec. 2.

O'Neill said his concerns involving Enron were over the possible impact on U.S. and global capital markets, but he was assured by Fisher that there weren't going to be problems in that area. O'Neill said that at the time of the calls he was deeply involved in pushing the president's stimulus package in Congress, pursuing the financial trail of terrorists and dealing with other issues of greater concern.

"I didn't think this was worthy of me running across the street (to the White House) and telling the president," O'Neill said on "Fox News Sunday." "I don't ... tell the president every time somebody calls me."

As to the sudden collapse of Enron and the nosedive of the company's stock, O'Neill said he was not surprised.

"I've watched lots of corporations come and go. ... There are very few companies that have been around for 40 or 50 years. ... Companies come and go. It's part of the genius of capitalism.

"People get to make good decisions or bad decisions, and they get to pay the consequences or to enjoy the fruits of their decisions. That's the way the system works."